Dave Hounddriver Posted June 13, 2014 Posted June 13, 2014 A Philippine Tax Question: Suppose a foreigner takes up residence with a young filipina and says: "Here's a half million pesos, go buy a small house we can live in". Does the B.I.R. start to smell money and tax her for having 500K pesos "income" from a gift? What if she gets 100,000 pesos from each of 5 foreigners on line? Is that a business income and taxable? How about if the foreigner 'loans' her the money but she has no means to pay it back? Is that a 'deemed' gift in the Philippines. Note: There are members here from many other countries and the tax rules in your country do not apply here so please do not reply with: In X country it is this way. I am specificly interested in Philippine tax requirements because the filipina who buys the small house is required to give a Tax Identification Number before she can get title to it. 1 Link to comment Share on other sites More sharing options...
fred Posted June 13, 2014 Posted June 13, 2014 This is the way I see it and I could be wrong! If the girl does not include the cash in her income tax return then how would they know unless she was being investigated by the BIR for some reason? Has she ever sent in a tax return in her life before? Does she have a BIR registered business account in her name? How is the cash to be sent? Bank or a cash outlet like W/U? Ive seen girls here that built houses with cash sent from foreigners before.. They pay land tax,building tax etc but not heard any of them complain about income tax! So far.. 1 Link to comment Share on other sites More sharing options...
jon1 Posted June 13, 2014 Posted June 13, 2014 I purchased a house and lot for my then fiance' in Mindanao back in 2009. She didn't have to pay anything to the BIR. Just the City Assessor's fees. I have not heard of any Filipino being raked over the coals by the BIR for not paying Income Tax. It seems that it's very hard to track individual's income because of the Philippines Bank Secrecy Law http://www.philstar.com/headlines/2014/03/24/1304432/bir-wants-bank-secrecy-law-lifted. Until they close huge loopholes like this they will not be able track individual's income accurately and they seem to be mainly focused on businesses. 1 Link to comment Share on other sites More sharing options...
Jack Peterson Posted June 13, 2014 Posted June 13, 2014 Suppose a foreigner takes up residence with a young filipina and says: "Here's a half million pesos, go buy a small house we can live in". Does the B.I.R. start to smell money and tax her for having 500K pesos "income" from a gift? dave, I asked my wife just now and she said to send this BIR page. it will tell you I think, all you need to know. She thinks that although the date is from 1998 to present, things have not changed on gift tax so it will stand. What I cant see, is if the gift amount, can be from 1 or more people but I suspect the BIR will take the total amount, into consideration. Hope it helps and I wish you the best on this Venture. http://www.bir.gov.ph/taxinfo/tax_donors.htm 2 Link to comment Share on other sites More sharing options...
OnMyWay Posted June 13, 2014 Posted June 13, 2014 That is scary. I guess I will only give loans! :) 1 Link to comment Share on other sites More sharing options...
Dave Hounddriver Posted June 13, 2014 Author Posted June 13, 2014 (edited) If the girl does not include the cash in her income tax return then how would they know Because to buy the house now requires a Tax Identification Number and registering for it now requires an unusual amount of paperwork such as Deed of Sale, Bank Account information including source of funds etc etc. (not sure how long they have been so strict on this. If the lady already has a T.I.N. number they you will be out of the maze and well on your way. My gf does not.) What I cant see, is if the gift amount, can be from 1 or more people but I suspect the BIR will take the total amount, into consideration. Thanks Jack for your link. I shall investigate further. I wonder if you know if giving a gift to your actual wife is exempt from the gift tax? This may be why the married guys don't get bothered with that. And I also wonder if a loan to a girl who has no way of paying it back would be a 'deemed' gift? If someone knows of an easy way to get a T.I.N. number then pm me. I hate to send her to the B.I.R. where she will give them too much information and end up with a massive tax bill, justified or not. Edited June 13, 2014 by Dave Hounddriver 2 Link to comment Share on other sites More sharing options...
Jack Peterson Posted June 13, 2014 Posted June 13, 2014 Thanks Jack for your link. I shall investigate further. I wonder if you know if giving a gift to your actual wife is exempt from the gift tax? This may be why the married guys don't get bothered with that. And I also wonder if a loan to a girl who has no way of paying it back would be a 'deemed' gift? If someone knows of an easy way to get a T.I.N. number then pm me. I hate to send her to the B.I.R. where she will give them too much information and end up with a massive tax bill, justified or not. Dave I will check into it later and let you know. it may be late or tomorrow as it is Friday and Girly night out talking :rolleyes: HER Not me :unsure: BTW you can apply for a T.I.N on line now link is below. https://ereg.bir.gov.ph/ereg/welcome.do Don't know if this helps any but I have put the BIR web for you as well. http://www.bir.gov.ph/ 1 Link to comment Share on other sites More sharing options...
fred Posted June 13, 2014 Posted June 13, 2014 (edited) If the girl does not include the cash in her income tax return then how would they know Because to buy the house now requires a Tax Identification Number and registering for it now requires an unusual amount of paperwork such as Deed of Sale, Bank Account information including source of funds etc etc. (not sure how long they have been so strict on this. If the lady already has a T.I.N. number they you will be out of the maze and well on your way. My gf does not.) What I cant see, is if the gift amount, can be from 1 or more people but I suspect the BIR will take the total amount, into consideration. Thanks Jack for your link. I shall investigate further. I wonder if you know if giving a gift to your actual wife is exempt from the gift tax? This may be why the married guys don't get bothered with that. And I also wonder if a loan to a girl who has no way of paying it back would be a 'deemed' gift? If someone knows of an easy way to get a T.I.N. number then pm me. I hate to send her to the B.I.R. where she will give them too much information and end up with a massive tax bill, justified or not. Oh..OK.. Must be pretty new as we have bought quite a bit of land here and although the buyer and seller needed a TIN number because of capital gains tax requirements,that has never really amounted to much because the lawyer advises the seller to declare a far lesser amount on the deed of sale for a vast reduction in taxes due... In many city areas,this is no longer possible as many of these city lots now have zonal values set in stone by the Municipal hall.. One of our properties here is subject to this. We have never had to provide a source of funds thus far so if what you say is true then this is a very recent BIR requirement that we have not yet heard of.. Gift tax? No idea!! I would imagine that there are millions of women in the R.P that must owe a huge amount!! Quite unknowingly! Cheers, Fred. Edited June 13, 2014 by fred 3 Link to comment Share on other sites More sharing options...
Call me bubba Posted June 13, 2014 Posted June 13, 2014 Dave , this is one of the best questions I have seen posted in a LONG TIME, could I suggest that you write DEAR PAO in the manilatimes.net as "fan" of this woman/column I am certain that she will answer this question which in turn will help others in the "same boat" Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net 1 Link to comment Share on other sites More sharing options...
Dave Hounddriver Posted June 13, 2014 Author Posted June 13, 2014 While I have written of this apparent law in this forum, it is not my intention to write to Dear Pao and make a big issue of it, perhaps drawing the attention of money grubbing bureaucrats to a source of money they have been neglecting. As in all Philippine laws, they are selectively enforced, if at all, and usually only when there is easy pickings showing up on their radar, thus I am happy to note that this law does not seem to be applied across the board. I will try to slip through the same cracks as everyone else and cross my fingers that the following event does not occur: B.I.R. agent: Ayo! Ayo! Filipina: What is it? B.I.R. agent: I am here to investigate your source of funds for purchase of this house. Filipina: Of course, I have a sugar daddy. B.I.R. agent: Sorry to inform you but you must pay 30% tax on that donation from your sugar daddy Filipina: *Grumbles and pays 200,000 pesos tax. Next Day B.I.R. agent: Ayo! Ayo! Filipina: What is it? B.I.R. agent: I am here to investigate the source of funds that you paid us 200,000 pesos with . . . . . . . . :1 (103): 1 Link to comment Share on other sites More sharing options...
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